What if an app you download does the paid/free split with previously free downloaders getting the paid version for free via the update?

I've had that happen before, and that was the right way to do it. If you don't tie the free downloads to the Apple ID, there won't be a way to determine you've downloaded the free version in the past.

I suspect that the free download is still tied to your Apple ID. Not having to provide a password each time shouldn't change that. I'm assuming you have to be logged in to the store (with your Apple ID) in order to download anything at all, but I frankly haven't tried it yet on iOS 6.

Type your Username/Password into iTunes, your iPad, iPod Touch, or iPhone and when you download something from the iTunes Music Store, Book Store or App Store it will download on each device automatically.

You also realise you don't need the password when updating Apps either...

That's true, unless you have multiple Apple IDs (which I do have), and then you are required to log in to the Apple ID account under which the App was originally purchased. I, for one, want to know up front under which Apple ID I'm about to acquire an app or book or music, etc. Being forced to enter the password is precautionary. Frankly, I think it is a security risk to allow even free apps to be downloaded without requiring a password.

Apple needs to really handle the multiple Apple ID process better. I think the purchase of free apps should not require a credit card, but should always require a password, and an indication under which Apple ID an app will be purchased.